The U.S. Dollar gained against the majority of its currency trading peers after the market experienced a dramatic sell-off following the release of Europe’s election results. Risk aversion in the Forex market increased on concerns over the Euro-zone’s debt crisis and weak U.S. employment data issued on Friday.
The Euro rate reached the lowest level in over three months following the French and Greek elections. In France, Socialist candidate Francois Hollande, who defeated Nicolas Sarkozy, pledged to promote more growth and fewer austerity measures. In Greece, voters flocked to anti-bailout parties and have stoked concerns that the country may exit the Euro region. The New Democracy party is said to have won, but if it fails to form a coalition, the country may not continue receiving help from the Troika.
Meanwhile, both the Australian and New Zealand Dollars declined amidst speculation that the outcome of the French and Greek elections may derail previous efforts to stem the E.U. debt crisis. The Aussie slipped to the lowest level this year against the U.S. Dollar after a Socialist candidate won the French presidency for the first time in 17 years. The Kiwi extended losses versus the Yen and the greenback as Asian stocks fell.
The British Pound advanced against the U.S. Dollar but the gains were limited as investors remain focused on the two recent E.U. elections. Investor sentiment firmed up as the weekend elections increased speculation that the international bailout agreement may be in jeopardy.